How to Vet a Subcontractor Before You Put Them on a Job

Using subcontractors is how most small GCs and specialty contractors scale without taking on the full cost of employees. Done right, it gives you flexibility. Done wrong, a bad sub can damage your client relationship, expose you to liability, and in some cases create problems with your license.

The vetting process doesn't have to be complicated, but it does have to happen before the job starts — not after something goes wrong.

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License verification

If your state requires licensure for the work a sub is performing, verify that their license is current before they touch the job. Most states have an online lookup tool through the contractor licensing board — it takes two minutes. An unlicensed sub performing licensed work on your project creates liability for you, not just for them.

Don't take their word for it. Look it up. Licenses expire, licenses get suspended, and occasionally people hand over a license number that belongs to someone else. The two minutes it takes to verify is worth it.

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Insurance

Request a certificate of insurance before they set foot on your job. You want to see general liability and workers' comp — both active, both with adequate limits for the scope of work.

Get yourself listed as additional insured on their GL policy. This means if a claim arises from their work on your project, you have protection under their coverage. Your insurance agent can explain exactly what to look for on the certificate.

If a sub doesn't carry workers' comp on their own employees, those employees may be considered your responsibility under some states' laws if they're injured on your job site. This is a significant exposure. Verify the coverage, not just that they have a policy.

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References from other GCs — not homeowners

Ask for references, but ask specifically for references from general contractors or other primes they've subbed for — not from homeowners. Homeowner references tell you how the sub presents to clients. GC references tell you how they perform in a professional working relationship: do they show up when scheduled, do they complete work to spec, do they communicate problems, are they easy to work with under pressure.

Call the references. A quick five-minute call is more valuable than any number of written reviews. Ask directly: would you use them again and why or why not.

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The trial job

Before you commit a sub to a large project, put them on something smaller first. A one- or two-day job where you can see their work quality, their crew behavior, their communication, and whether they show up as promised. What you learn on a small job will either confirm your confidence or save you from a disaster on a large one.

This isn't insulting to a good sub. It's normal due diligence. Most experienced subs understand it.

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Red flags to take seriously

Difficulty producing a current COI. Vague answers about their license status. References they can't produce quickly. A quote that's dramatically below everyone else's. Pressure to skip the paperwork "just this once." Any of these should give you pause.

The cheapest sub in the room often becomes the most expensive one when you add up the callbacks, the rework, and the client relationship repair work.

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The subcontractor agreement

Once you've vetted a sub and they're ready to work your project, put the relationship in writing. A basic subcontractor agreement covers: scope of work, price and payment terms, schedule, what happens with change orders, insurance requirements, and what you'll do if they don't perform to spec.

You don't need a complex legal document for routine subcontracting relationships. A clear one-page agreement covering those items is sufficient and enforceable. Having it beats not having it if anything goes sideways.

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Payment terms with subs

Standard practice is to pay subs after you've been paid for their portion of the work — often called pay-when-paid or pay-if-paid clauses. Make sure your sub agreement addresses this clearly. You shouldn't be financing a sub's work out of your operating funds while you're waiting on client payment. Structure the terms so cash flows in the right direction.

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